Qatar takes Severn Trent stake as water group pledges £12.9bn investment plan

Qatar’s sovereign wealth fund has taken a £500 million stake in Severn Trent, with the water company hoping to raise more than £1 billion to fund a new investment plan.

Severn Trent, responsible for an area stretching from the Bristol Channel to the Humber, and from Mid Wales to the East Midlands, has unveiled a ‘record’ £12.9 billion investment program to improve its environmental performance.

The FTSE 100 company said the plan would create up to 7,000 jobs in the Midlands, claiming it would lead to a 30 per cent drop in storm overflows and a 16 per cent drop in leaks.

Under the plan, which covers the regulatory period from April 2025 to March 2030, £5 billion of capital expenditure will be spent on “increasing capacity and services beyond current levels”, Severn Trent said.

The majority of the funding will be aimed at improving ‘the natural environment’, while a further £700 million will go towards increasing water supplies.

A further £400 million will be spent to make the company operationally net zero over the next ten years.

To fund these measures, a £1 billion share placement is being undertaken, half of which will come from the Qatar Investment Authority and the remainder will be raised from institutional investors.

A retail placement is also being offered to raise almost £7 million from private individuals.

The average annual household water bill will also increase from £379 to £518, although Severn Trent has pledged a £550 million support package for customers struggling to pay their bills due to current cost-of-living pressures.

The Coventry-based group, which serves 4.8 million homes and businesses in Wales and the Midlands, plans to submit the plan to water regulator Ofwat on October 2.

Liv Garfield, CEO, said: “By 2030, we will have transformed our network to provide the very best service to our customers.

‘At the heart of this ambition is a commitment to a sustainable future – from healthier rivers to the creation of thousands of jobs, fewer leaks and a water supply that is ready for the impacts of climate change and population growth.

“At the same time, our £550 million affordability program aims to ensure that no customer in our region has to worry about paying their water bill.”

British water companies have seen their reputations tarnished in recent years by controversy over ongoing sewage discharges and leaks into rivers and beaches.

According to Surfers Against Sewage, around 390,000 were reported in Britain in 2022, based on data from the Environment Agency, Natural Resource Wales and the Scottish Environment Protection Agency.

When publishing its annual results in May, Severn Trent admitted it should have ‘paid much more attention and acted more quickly’ in tackling sewer problems.

The water industry has come under further criticism for racking up huge debts while rewarding shareholders with billions in dividends and giving executives significant pay packages.

Liv Garfield is one of the highest-paid figures in the industry, having earned £3.2 million in the last financial year, including a bonus of £358,800, taking her total earnings since becoming CEO to £25 million.

Bosses at numerous other water companies, including Thames Water and Pennon Group chose to give up their bonuses.

Severn Trent Shares were 2.6 per cent, or 59p, higher at £23.24 on Friday morning, although they have shrunk by around 13 per cent so far this year.